Prime Minister Bill English will seek a mandate at the general election for superannuation changes which will affect every New Zealander under 45.
A major policy shift to raise the retirement age from 65 to 67 by 2040 was announced by English this afternoon, but is not yet set in stone.
The higher age of eligibility will be legislated for next year, but English has conceded that the age could stay at 65 if that is the bottom line of potential coalition partners after the September election.
After 48 hours of growing pressure from Opposition parties, English relented and released more details about his plans for New Zealand Super at his weekly press conference this afternoon.
The age of eligibility will begin progressively lifting in 2037, reaching 67 by 2040. Anyone born on or after July 1, 1972 will be affected.
In another major policy change, immigrants will have to live in New Zealand for twice as long - 20 years - to get access to NZ Super, including five years after they turn 50. It would apply as soon as the law changed - next year if National remains in power.
The proposals could affect National's chances of winning a fourth term, given its potential coalition partner New Zealand First is firmly against a higher retirement age.
New Zealand First leader Winston Peters questioned the proposed changes, saying they achieved nothing. But he praised proposals to make it harder for immigrants to access NZ Super.
Act Party leader David Seymour went further, saying English was "taking the proverbial" and that the distant deadline for a higher retirement age was "verging on satire".
The scheme was costing an extra $1 billion a year and the age needed to be raised immediately, he said.
Labour leader Andrew Little reiterated today that he opposed a higher age of eligibility because people in physical work struggled to stay in employment until the existing retirement age.
That is a reversal of Labour's policy under previous leaders.
English rejected suggestions the proposed changes to superannuation would dent National's re-election chances, saying that they would instead "enhance" them.
He hoped he would get cross-party support on the proposals, noting that they were "about as reasonable path as you could get".
He was not worried that the changes could encourage NZ First - which firmly opposes a higher retirement age - to choose Labour in any potential coalition deals after the election.
English justified the changes by saying that the scheme was forecast to become unaffordable, and because New Zealanders were now living longer.
90% of superannuitants 67+ to be swimmable by 2040— Toby Manhire (@toby_etc) March 6, 2017
PM English on superannuation change: "It was always our intention to announce it today... didn't want to announce it ahead of announcing it"— Toby Manhire (@toby_etc) March 6, 2017
NZ Super was relatively affordable now, he said, but was expected to rise from 5 per cent of GDP to 8.4 per cent by 60 years.
That was only affordable if spending was cut in others, such as health or education - something which English said he was unwilling to do.
The proposed changes would save the Government $4 billion a year, or 0.6 per cent of GDP, once fully phased in.
Both policy shifts fell short of recommendations by the Retirement Commissioner, who wanted the age lifted in 2027 and the residency requirement lifted to 25 years.
English said he believed a longer adjustment period was fairer because it gave families more time to plan for their future.
Other settings such as linking NZ Super to the average wage and universal Super without means-testing would remain unchanged.
The age at which people could access Kiwisaver would remain at 65.
Actually I was born on 15 March 1972 so even I'll get me super at 65! I applaud the bold new policy!— Matthew Hooton (@MatthewHootonNZ) March 6, 2017
BREAKING Government to announce drug testing at 65 for NZ Super— Hamish Keith (@hamish_keith) March 5, 2017
Great to hear @pmbillenglish moving on NZ Super. Scheduling a shift early enough and phasing it in was always going to be the best approach.— Eric Crampton (@EricCrampton) March 6, 2017
KIWIS LIVING LONGER
Finance Minister Steven Joyce said New Zealanders' life expectancy had risen by 12 years over the past 60 years.
"When the age was set at 65 in 2001, a retiree could expect to spend about a fifth of their life receiving NZ Super.
"That has since increased to about a quarter.
"Following this change, those eligible for NZ Super at 67 in 2040 can still expect to receive it for a quarter of their life on average."
It would also bring New Zealand into line with other countries like Australia, the UK, Denmark, Germany and the United States.